Question

Suppose Andrea has a job that pays her $50 000 per year (after taxes). She is considering quitting her job and going to university full time for four years. Tuition fees and books will cost $12 000 per year. Living expenses in either situation will cost $20 000 per year. What is the opportunity cost of Andrea's four-year university degree?

		$200 000
		$128 000
		$288 000
		$240 000
		$248 000

Answer 1

As we can see, from the information that, Andrea has a job that pays her $50,000 per year and if she decides to go to the university for full-time course which will last for four years, therefore, she will lose the opportunity of earning $200,000 in four years.
Also the opportunity cost is the value of the next best alternative, so we can say that the opportunity cost of Andrea's four-year university degree is $200,000 which she could have earned by not going to the college but if she decides to go to the college it means she will not be able to work at full time job. So, the right answer is $200,000.